Stimulus checks rewired how some Americans see money

For Denise Diaz, the benefits of pandemic-era stimulus checks went beyond everyday dollars and cents. They rewired how she thinks about money.

Diaz, a mother of three who lives outside Orlando, Florida, received more than $10,000 from three rounds of “economic impact payments.”

They were among the 472 million payments issued by the federal government, totaling about $803 billion. The effort amounted to an unprecedented experiment to prop up households as Covid-19 cratered the U.S. economy.

The checks (and other federal funds) are at the epicenter of a debate as to whether and to what extent the financial assistance helped fuel inflation, which is running at its hottest in about 40 years.

But they undoubtedly offered a lifeline to millions of people during the worst unemployment spell since the Great Depression. Recipients reached by CNBC used the money in various ways — to cover household staples, make debt payments and create rainy-day funds, for example.

Diaz, who co-directs a local nonprofit, Central Florida Jobs With Justice, used the funds to pay off a credit card and a car loan. Her credit score improved. She built an emergency fund — previously nonexistent — which the household was able to lean on when Diaz’s partner lost his job earlier this year.

Consequently, Diaz, 41, feels more financially stable than during any other period of her adulthood.

The financial buffer and associated peace of mind also changed her psychology. She automated bill payments (for utilities, a second family car and credit cards, for example) for the first time.

“We weren’t doing that [before],” Diaz said. “Because you never knew what could happen [financially], so I never trusted it.”

These days, Diaz thinks more about budgeting. Homeownership seems within reach after years of renting.  

“The stimulus changed how I think about what’s possible, personal spending habits and the way in which I manage my money,” she said.

The stimulus checks were the result of legislation — the CARES Act, Consolidated Appropriations Act and American Rescue Plan Act — Congress passed in 2020 and 2021 to manage the fallout from Covid-19.

Households received payments of up to $1,200, $600 and $1,400 a person, respectively. Qualifications such as income limits and payment amounts for dependents changed over those three funding tranches.

Census Bureau survey data shows most households used the funds for food and household products, and to make utility, rent, vehicle, mortgage and other debt payments. To a lesser extent, households used them for clothing, savings and investments and recreational goods.

Salaam Bhatti and Hina Latif, a married couple living in Richmond, Virginia, used a chunk of their funds to reduce credit card debt, which has proven difficult in recent years, especially after having kids. (They have a 3-year-old and a 3-month-old.)

Bhatti and Latif paid off several thousand dollars of the debt during the pandemic and…